Maritime Logistics Equity Partners (MLEP) has rapidly followed its debut in the chemical segment by snapping up a second pair of stainless-steel chemical tankers — and is starting a second, larger fund to buy more.
It paid an undisclosed price for the 20,000-dwt AS Olivia and AS Omaria (both built 2007), renamed Easterly AS Olivia and Easterly AS Omaria. The seller was Philippines-based Safemarine Corp, a subsidiary of Japanese shipowner Nisshin Kaiun.
VesselsValue prices the Usuki Zosensho-built ships at $11.93m and $12.28m, respectively.
This is not the first time those two ships have been reported sold. TradeWinds reported in April that brokers were linking London-based Tufton Oceanic to a package of four Nisshin-owned sisterships. In the end, however, only two of them appeared in the Tufton Oceanic fleet.
TradeWinds reported in September on MLEP’s first purchases — two Cido Shipping-owned, Usuki Zosensho-built chemical tankers, the 20,000-dwt Easterly Beech Galaxy (built 2007) and Easterly Lime Galaxy (built 2008). Crate declined to disclose prices on any of the deals.
That makes four sisterships in the MLEP fleet. A fifth, sixth and seventh have been identified, all of similar vintage and provenance, to be funded by MLEP's initial equity raise of just under $100m using very little leverage, chief executive Darrell Crate told TradeWinds.
"We believe we will have the capital in the first tranche deployed by early in the first quarter," he said.
As TradeWinds reported, the MLEP I fund closed in September.
The company has also unveiled a second, larger equity raise that is meant to fund a series of purchases by the end of this year.
The MLEP investment thesis is based on global short supply of tonnage in the underbuilt chemical carrier segment, plus the ready availability of secondhand ships built before the newbuilding boom peaked and dived in 2008.
Crate — who is also managing principal of Massachusetts-based sponsor Easterly Asset Management — said he would not rule out an asset play once he has a fleet in hand. But the intention is to trade the ships, not to flip them. His fund investors are not tied to a quick exit.
"I think we'll be opportunistic as the market develops, but we are excited to run these ships," he told TradeWinds. "Our fund has no lifetime. We can run these ships for longer than these ships can run."
Crate acknowledged that he could face competition for his target vessels, given his assumptions, but he believes his access to equity will make him an advantaged buyer.
"With the type of capital we target, we are able to move swiftly. People have confidence in our ability to execute deals. That's an advantage in this market. We can purchase assets at a fair price and also satisfy the expectations of our investors."
The investors targeted for the second tranche are, as before, a combination of "a couple of large institutions, some family offices and some high net-worth individuals", who would not necessarily be familiar names to TradeWinds readers, although some have made shipping investments before.
MLEP's model is lightly leveraged, but Crate declined to comment on just how light, beyond saying debt finance is "within reasonable limits".
"We are building a syndicate of senior banks who we think will be useful to us over time," he said, but declined to identify any for now.
All ships are meant to trade in the US-based pools of Singapore chemical tanker manager Womar Logistics, which has also been providing the sale-and-purchase connections for Crate's direct, unbrokered buys.
The MLEP II raise is targeted at between $150m and $200m to fund a more diverse 15 to 20 units in size brackets up to MR, including ships with both stainless steel and coated tanks. Not all of those ships are identified, but Crate said his company has a list of candidate companies.
"We are working to get to know the principals and they are getting to know us," he said. "And we are fond of Japanese tonnage, but our target list is broader than that."
MLEP and Womar expect busy times ahead. "We'd like to get our money put to work within the year," Crate said.
